Core inflation rise prompts debt fears

Whilst the CPI and RPI measures of inflation both fell in June, the core measure actually reached its highest level since 1997, suggesting a future of debt misery.

CPI dropped to 3.2 per cent – still way above the Bank of England’s 2 per cent target – whilst RPI fell to 5 per cent. However, core inflation, which ignores volatile energy and food prices, rose from 2.9 per cent to 3.1 per cent.

This suggests that the fall in the headline measures of inflation is only temporary and inflation may in fact still be heading upwards. This could leave millions seeking debt advice as their pay and savings get squeezed still tighter as prices rise.

These figures may also encourage the Bank of England to consider raising interest rates to keep inflation in check.

Kevin Still, director of Atlantic Financial Management, says: "Anything that squeezes UK household disposable income is of concern to cash strapped families who may be at risk of debt problems.

"Debt advice should be sought when it is clear that household budget doesn't stack up.”

"Grim" future of debt for Brits

16/09/2010

New unemployment stats show a slight drop in the numbers out of work, but there are fears it is the ...

Unchanged inflation, debt link

15/09/2010

Consumers are still being threatened by rising debt levels as CPI inflation stayed at 3.1 per cent i ...

Double dip debt risk

25/08/2010

Britons could find themselves needing more debt solutions in future, after a Bank of England adviser ...

8% interest rate heralds debt concern

24/08/2010

Interest rates need to be brought up to 8 per cent by 2012 in order to battle inflation, even though ...